receive bad check advice law advice insurance advice community law advice case evaluation ask lawyer amp legal topics legal topics accident law bankruptcy law business law criminal law employment labor law estate planning family law financial law general practice government law immigration law insurance law intellectual property litigation malpractice law personal injury real estate law tax law small claims admiralty maritime aviation law general practice topics general practice topics lawyers law firms litigationcontract lawguarantees warrantieslemon lawlicensestraffic law advice law advice general practice contract law current run small business occasionally checks returned due insufficient funds collect written freeadvice staff sponsored take reasonable precautions bad check occasionally slip system bad check bounce customer insufficient funds account account deleted closed solutions apply primarily bad checks individuals including calling customer sending certified letter contacting bank handle bad checks solutions apply primarily bad checks individuals techniques may appropriate bounced check comes business back checks written individuals call customer ask bad check good pay cash reason good write phone number take check permitted state law careful call customer laws states limit collect debts avoid problems call discuss debt employer sure request payment polite threatening debtor stating publicize name notify employer illegal send certified letter include return receipt demand payment bounced check sets stage possible criminal prosecution check writer intentionally attempted defraud states including arizona california colorado florida illinois montana york washington bad check laws particularly favorable businesses states send written demand payment may able collect extra damages court times value check check writer come contact bank wait days inquire see check good customer may deposited paycheck bounced check dishonored normally check status account calling bank saying hold check certain dollar amount asking account cover take returned check bank cash alternative ask bank enforced collection bank offers service bad check held special category money deposited account procedures costs vary sure obtain details bank request prosecution intentionally writing bad check crime noted contact local district prosecuting office request prosecution may give check writer written notice bad check may innocent mistake police department district attorney tell you send notice prelude prosecution generally notice contain oral written communication customer passed bad check avoid temptation threaten prosecution threat may constitute harassment extortion state statutes police departments prosecuting officials drag feet kinds cases saying want collection agency bad check programs person written check contacted given chance avoid prosecuted making check good counties attending special classes diversion program sue small claims court typically option options exhausted bounced check maximum amount sue small claims court close mind waiving excess states limits stated earlier followed bad check procedures state may entitled times amount check damages court filing service process costs check writer job generally able judgment proceedings paid wages difficult collect wages low income people contact collection agency smaller checks going small claims court may worthwhile despite huge cut collection agency takes want put time energy states small claims court fairly friendly businesses example may able send employee court business records states business owner appear testify person may suing check writer trouble worth want keep minimum personal involvement collection process keep open possibility letting collection agency work customer stops payment check customer stops payment check claiming goods sold defective legitimate dispute good faith valid defense prosecution civil lawsuit multiple damages turns goods fact defective customer entitled reduction amount owed extreme cases cancellation debt allegations trumped excuse entitled full legal remedies court dealing customer unhappy merchandise purchased best policy simply customer return goods call day payment full checks careful accepting depositing checks say payment full similar check writer owes may barred collecting additional amount good faith dispute check writer owes depositing full payment check usually means accept check complete satisfaction debt crossing words payment full generally cut suing balance number states changed rule creditors states cash full payment check explicitly reserve right sue balance check writer court states modified rule include alabama delaware massachusetts minnesota missouri hampshire york ohio rhode island south carolina south dakota west virginia wisconsin preserving right sue bad check state modified rule normally preserve right sue balance writing words protest prejudice endorsement example california allows simply cross full payment language cash check sue balance check writer may able following certain procedures specified california statute view related bad checks articles view faq general practice legal topics general practice attorney ask lawyer looking social read articlesi run small business occasionally checks returned due insufficient funds hellip okay retailer advertise wrote bounced check select practice area adoption support amp child custody arbitration aviation maritime amp boat accident banking bankruptcy business car accident civil rights amp ada collection construction contract copyright ip amp trademark criminal dui dwi divorce education law elder law employment environmental estate planning franchise general practice government healthcare nursing abuse immigration insurance international juvenile landlord tenant legal malpractice lemon law libel amp slander litigation medical malpractice military patent pensions amp benefit personal injury product liability railroad accident real estate 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What To Do If You Receive a Bad Check Free Advice Law Advice Insurance Advice Community Law Advice Free Case Evaluation Ask a Lawyer Q amp A Legal Topics All Legal Topics Accident Law Bankruptcy Law Business Law Criminal Law Employment Labor Law Estate Planning Family Law Financial Law General Practice Government Law Immigration Law Insurance Law Intellectual Property Litigation Malpractice Law Personal Injury Real Estate Law Tax Law Small Claims Admiralty Maritime Aviation Law General Practice Topics All General Practice Topics Lawyers Law Firms LitigationContract LawGuarantees WarrantiesLemon LawLicensesTraffic Law Free Advice Law Advice General Practice Contract Law Current Page I run a small business and occasionally checks are returned due to insufficient funds What can I do to collect Written by FreeAdvice Staff Sponsored Ad Even though you take all reasonable precautions a bad check will occasionally slip through your system A bad check can bounce if the customer has insufficient funds in their account or if the account has been deleted or closed There are several solutions that apply primarily to bad checks by individuals including calling the customer sending a certified letter or contacting the bank How to Handle Bad Checks There are several solutions that apply primarily to bad checks by individuals Other techniques may be more appropriate when the bounced check comes from another business For back checks written by individuals you can Call the customer Ask that he or she make the bad check good or pay you in cash This is one reason it's good to write down the customer's phone number when you take a check if permitted by state law But be careful about when you call the customer and how often Laws in several states limit what you can do to collect debts To avoid problems call only between a m and p m don't discuss the debt with the customer's employer and make sure your request for payment is polite Threatening a debtor by stating that you'll publicize his or her name or notify his or her employer is illegal Send a certified letter Include a return receipt with the demand for payment on the bounced check This sets the stage for a possible criminal prosecution if the check writer intentionally attempted to defraud you Also states including Arizona California Colorado Florida Illinois Montana New York and Washington have bad check laws that are particularly favorable to businesses In such states if you send a written demand for payment you may be able to collect extra damages in court often two or three times the value of the check if the check writer doesn't come through Contact the bank Wait a few days and then inquire to see if the check is now good as the customer may have deposited a paycheck after the bounced check was dishonored You can normally check the status of an account by calling the bank and saying you hold a check for a certain dollar amount and asking if there is enough in the account to cover it If so take the returned check to the bank and cash it Another alternative is to ask the customer's bank for enforced collection If the bank offers this service the bad check will be held in a special category The next money deposited in the customer's account will go to you Procedures and costs vary so be sure to obtain details from the bank Request prosecution Intentionally writing a bad check is a crime As noted above before you contact the local district attorney's or prosecuting attorney's office to request prosecution you may have to give the check writer a written notice After all the bad check may have been an innocent mistake The police department or district attorney can tell you if you must send a notice as a prelude to a prosecution generally you must and what the notice must contain But again in any oral or written communication with the customer who passed the bad check avoid the temptation to threaten prosecution Such a threat may constitute harassment or extortion under some state statutes Some police departments and prosecuting officials drag their feet on these kinds of cases saying that they don't want to be used as a collection agency Others have bad check programs under which the person who has written the check is contacted and given a chance to avoid being prosecuted by making the check good and in some counties by attending special classes under a diversion program Sue in small claims court Typically this is only an option when all other options have been exhausted The bounced check must be less than the maximum amount you can sue for in small claims court or close enough that you don't mind waiving the excess Most states have limits of to As stated earlier if you've followed the bad check procedures in your state you may be entitled to two or even three times the amount of the check as damages as well as your court filing and service of process costs And if the check writer has a job you'll generally be able to use after judgment proceedings to get paid out of the worker's wages although it's difficult to collect from the wages of low income people Contact a collection agency For smaller checks going to small claims court may not be worthwhile Or perhaps despite the huge cut a collection agency takes you might want to put your time and energy elsewhere And while some states make small claims court fairly friendly to businesses for example you may be able to send an employee to court with business records other states make the business owner appear to testify in person That may make suing the check writer more trouble than it's worth So if you want to keep to a minimum your personal involvement in the collection process keep open the possibility of letting a collection agency do most of the work When the Customer Stops Payment on a Check Sometimes a customer stops payment on a check claiming that the goods you sold were defective If there's a legitimate dispute the customer's good faith will be a valid defense to a prosecution or a civil lawsuit for multiple damages And if it turns out that the goods were in fact defective the customer will be entitled to a reduction of the amount owed or even in extreme cases a cancellation of the debt But if the customer's allegations are a trumped up excuse to get something for nothing you'll be entitled to your full legal remedies in court Often however in dealing with a customer who is unhappy with the merchandise purchased the best policy is simply to have the customer return the goods and call it a day Payment in Full Checks Be careful about accepting and depositing checks that say Payment in Full or something similar If the check writer owes more you may be barred from collecting the additional amount Where there's a good faith dispute about how much the check writer owes you depositing a full payment check usually means that you accept the check in complete satisfaction of the debt Crossing out the words Payment in Full generally won't help you You'll still be cut off from suing for the balance However a number of states have changed this rule to help creditors In those states if you cash a full payment check and explicitly reserve your right to sue for the balance you can go after the check writer in court States that have this modified rule include Alabama Delaware Massachusetts Minnesota Missouri New Hampshire New York Ohio Rhode Island South Carolina South Dakota West Virginia and Wisconsin Preserving Your Right to Sue for a Bad Check If your state has modified the rule you normally can preserve your right to sue for the balance by writing the words Under Protest or Without Prejudice with your endorsement For example California allows you to simply cross out the full payment language cash the check and sue for the balance but the check writer may be able to get around this by following certain procedures specified in the California statute View Related Bad Checks Articles View the Next FAQ General Practice Homepage All Legal Topics Find a 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